Woolf: Is the middle class really disappearing?

Art Woolf examines the claim made by politicians, including presidential candidate Sen. Bernie Sanders, that the middle class is in danger of disappearing. Woolf compares the incomes of segments of the population today and 30 years ago.(Photo: AP)

One of the biggest campaign issues in the upcoming — or should I say the ongoing — presidential election campaign is likely to be the health, or lack of health, of the middle class. Is the middle class shrinking? Are incomes stagnating? Are the rich getting richer and the poor getting poorer?

Many pundits and politicians seem to know the answers to all of these questions and, even better, can answer them in a few short sound bites: The middle class is shrinking. Wages are lower today than they were decades ago. Most Americans are worse off today than they were two or three decades ago. Indeed, according to our own presidential candidate and senator, Bernie Sanders, the middle class will vanish in a generation.

I wish I had answers to all those questions and was certain about those answers. Unfortunately I don't and I'm not.

Instead, I can focus on one of those questions that is relatively easy to define, although not so easy to answer or measure: Are incomes falling?

The top row of the table shows that the median income for all 123 million households in the U.S. is close to $52,000. That's higher than it was 33 years ago, but a nine percent increase over more than three decades is a pretty meager growth rate. But incomes are higher than they were decades ago. That's good. But they're lower than they were a decade ago. Not so good.

But that low rate of household income growth conceals a lot. Take married couple families, two people who may or may not both work, and who may or may not have children living at home. Their median income is just over $76,000 and their real income has increased by 23 percent over the past 33 years. That's more than twice the growth rate for all households.

Single parent families have fared differently. Single mothers with children have a much lower median income —$31,400 — but their incomes have grown by 12 percent over the past 33 years; faster than the income for all households.

Median incomes for single fathers raising children without a mother present is about $13,000 higher than that for single mothers with kids, but single-father families' real incomes have fallen by 6 percent over the past 33 years.

Finally, single people living by themselves — which include widows, widowers, and anyone else living in an apartment or house with no other roommates — have seen their incomes rise by 20 percent since 1980, although at $26,000, their incomes are lower than for any other group.

So, surprisingly, all of these different types of household configurations, except for single fathers with children, have seen their real incomes grow faster than the nine percent growth rate for all households. How can that be? The answer is that there has been a dramatic shift in the mix of household types in the U.S. over the past 30 years.

As the bottom panel of the table shows, there are 40 million more households in the U.S. today compared to 1980. One-quarter of that growth has come from higher-than-average income married couple families. In 1980, 60 percent of all households were married couple families. Today, less than half are married couples. Over the past three decades, other types of households have grown much faster than married couples, and all of those types of households have lower average incomes.

Another quarter of the increase is due to more single parent families, and more than one-third of the increase is due to the increasing number of people living alone. Today, more than one quarter of all the houses and apartments in the United States have only one-person living in them. In 1980 it was less than one-quarter and in 1960 only 13 percent of Americans lived alone. I see that as a sign of affluence, not of increased poverty.

And even this understates the actual gain in incomes and the standard of living of most Americans over the past three decades. For one, the numbers are affected by the large number of immigrants in the U.S., and immigrants have incomes that are generally lower than native-born Americans.

Today 13 percent of Americans, some 40 million people, are immigrants. In 1980 only 6 percent of the population was born abroad. Even if their family incomes are very low, most immigrants' incomes are still higher than they were in their home country. If the U.S. had the same share of immigrants today that we had in 1980, our measured income growth would be significantly higher than the table shows.

But that doesn't mean people would be better off. Non-immigrants' incomes are unaffected by the presence of immigrants. But the immigrants themselves would be greatly affected if they couldn't come to the U.S. Just ask a low-income immigrant if they'd prefer to go back to their homeland. Not only would their incomes be lower, but even more important, the opportunities for them and their children would be far worse than they are in the U.S.

The incomes in the table also ignore benefits, especially health insurance benefits. Despite the large number of uninsured in the U.S., the vast majority of Americans have health insurance. The employer-paid portion of those benefits is worth an average of $12,000, according to the Kaiser Family Foundation. Those benefits are not included as income in the official income statistics so our true income levels are understated.

And when we examine "inflation adjusted incomes," as I do in the table, we have to be very careful about what that means, especially when we are looking at a third of a century of changes. The average person, including most poor people and certainly everyone in the middle class, has access to host of technologies and innovations that simply didn't exist in 1980, such as cell phones, personal computers, access to the Internet, medical technologies, new medicines that have been developed since 1980, and many other goods and services. Even if incomes, as we measure them in the table, hadn't grown at all since 1980, inflation adjusted incomes don't adequately reflect any of these modern marvels we now take for granted.

Although income, poverty, and inequality are likely to be key campaign issues, they are not our most important economic problem. Sluggish growth is. The table clearly shows that for all households and all household types, median incomes are lower than they were in 2000, and lower than they were before the onset of the Great Recession. Incomes fell for all groups during the recession and haven't grown since it ended.

Unfortunately, getting the economy back to a higher growth trajectory doesn't lend itself to simple soundbites. And it's extremely hard to figure out why our economy is growing so slowly and to prescribe appropriate solutions to get it back on track.